Nirmal Bang: Kajaria Ceramics - Initiate Coverage With ‘Accumulate’ On Attractive Valuation

BQ Blue’s special research section collates quality and in-depth equity and economy research reports from across India’s top brokerages. These reports offer BloombergQuint’s subscribers an opportunity to expand their understanding of companies, sectors and the economy..Nirmal Bang Report.The steep decline in Kajaria Ceramics Ltd. stock price by 26.7% from its 52 week high primarily highlights the concerns of slowdown in earnings growth due to the Covid-19 pandemic.The continued weakness in the stock price implies that the market is not factoring in a recovery post Covid. In our view, the negative impact is overdone.We expect a sharp recovery towards normalcy from FY22.The stock is currently trading at price to earnings of 26.2 times on September FY23 earning per share, which is below the five year trading range of 30-50 times one year forward earnings.Kajaria Ceramics has a strong balance sheet with consistent decline in net debt to equity ratio despite addition of production capacity.We expect the working capital to peak in FY21 and improve from FY22. The net debt to equity stood at (0.07)times in FY20 and is expected to decline to (0.18) times in FY22 and (0.26) times in FY23.The cash conversion cycle (days) has increased from 25 days in FY12 to 111 days in FY20.We expect it to peak at 145 days in FY21 given the sharp impact of Covid-19 before improving to 120 days in FY22 and 85 days in FY23..Click on the attachment to read the full report:.DISCLAIMERThis report is authored by an external party. BloombergQuint does not vouch for the accuracy of its contents nor is responsible for them in any way. The contents of this section do not constitute investment advice. For that you must always consult an expert based on your individual needs. The views expressed in the report are that of the brokerage and do not represent the views of BloombergQuint. .Users have no license to copy, modify, or distribute the content without permission of the Original Owner.

Nirmal Bang: Kajaria Ceramics - Initiate Coverage With ‘Accumulate’ On Attractive Valuation

Nirmal Bang: Kajaria Ceramics - Initiate Coverage With Accumulate Rating On Attractive Valuation

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